26.02.2016 — Tax Authority to Create Unified SME Register

The Russian Tax authority will create a unified register of small and medium-sized enterprises (SMEs) upon the request of the Russian President, and pursuant to the Federal law No.408-FZ dated 29.12.2015. The law provides for the scope of information to be recorded in the register, the procedure for its creation, and the criteria of SME eligibility.

The new law will enter into force on July 01, 2016, whereas the register will be available on the official website of the Tax authority starting from August 01, 2016. The Tax authority will be responsible for running the new register. Pursuant to the Federal law, the register shall be formed annually on August 10, and it shall be updated on a monthly basis.

It is predicted that the new law will reduce costs incurred through the confirmation of the SME status, and will simplify the search of potential SME suppliers.

25.02.2016 — Constitutional Court to Determine If Decreasing Judicial Costs Is Unconstitutional

The Supreme Court has recently clarified a number of moot points regarding the recovery of judicial costs. Among other things, the Supreme Court held that the reasonableness of judicial costs incurred through payment for legal representation cannot be explained by fame and reputation of the lawyer. The Constitutional Court is going to consider a complaint brought by Shell Neft alleging that assessment by Russian courts of feasibility of the choice of legal representative is unconstitutional. 

Court practice shows that very often courts disproportionately decrease the amount of recoverable judicial costs. After mitigation of the recoverable judicial costs on successful termination of a tax claim almost by 10 times the lawyers of Shell Neft initiated proceedings in the Constitutional Court to declare that the court rule Article 110(2) of the Arbitrazh Procedure Code is unconstitutional. Article 110(2) says that ‘reasonable costs incurred through legal representation by the winning party shall be recovered from the other party”. Shell Neft alleges that by disproportionately decreasing recoverable judicial costs, Russian courts violate the constitutional principles of legal certainty and the protection of private property, the right to qualified legal representation as well as the right to full recovery of damages.

Shell Neft has invited the Constitutional Court to determine the boundaries of ‘reasonableness’, referring to the fact that ‘reasonable’ does not always mean ‘the cheapest’, and that in case of legal services it is reasonable to hire an experienced legal representative who is the best in his field. The complaint is currently being reviewed by the Secretariat of the Constitutional Court

24.02.2016 — State Duma to Consider Decriminalisation of Economic Offences

The State Duma is going to consider a draft bill (No. 1001543-6) introducing changes to the Criminal and Administrative Codes, and providing for the decriminalisation of several economic offences. According to the bill, entrepreneurs who are first-time offenders will face a less serious sentence. However, the bill provides for higher administrative fines than the ones currently set forth in the Criminal Code. Entrepreneurs who are repeat offenders may face arrest and imprisonment.

The draft bill was proposed by Alexander Ageev, member of the Russian State Duma. It provides for the decriminalisation of more than 30 economic offences, such as tax avoidance by an individual, or a legal entity, failure to perform the obligations of a tax agent, concealment of funds, or property, of a legal entity, which are used for tax payment purposes. According to Mr Ageev, imposition of administrative rather than criminal liability pursuant to the said bill will incentivise individuals and legal entities to comply with the law, and avoid committing economic offences. 

23.02.2016 — Government Approves 2016-2018 Social and Economic Development Forecast

The Russian Government has approved the Forecast of the social and economic development of Russia for the year 2016, and for the target period of 2017-2018 developed by the Ministry of Economic Development. The document describes three scenarios: the baseline, the target, and the conservative one. The baseline scenario defines the federal budget featured in 2016.

According to the baseline scenario, experts predict a GDP growth of 0.7% in 2016, 1.9% and 2.4% in 2017 and 2018 accordingly, as well as a decline in inflation from 12.2% in 2015 to 6.4% in 2016, and a decline in the annual average inflation rate from 15.4% to 7.4%.

The main priorities of the economic policy in the target period are as follows: enhancing investment attractiveness, creation of a favourable business environment, balanced regional development, as well as information technology development, and support of high-tech economy sectors.

22.02.2016 — Roskomnadzor Clarifies How to Fill in Personal Data Notification Form

The Federal Service for Supervision of Communications, Information Technology and Mass Media (Roskomnadzor) has approved permanent guidelines on filling in the processing of personal data notification form. Previously legal entities used to rely on temporary guidelines approved by Roskomnadzor on December 30, 2014.

The updated guidelines clarify the procedure whereby legal entities with branch offices shall notify Roskomnadzor of personal data processing, the list of encryption (cryptographic) tools used to process personal data that should be indicated in the notification form, as well as explain how to fill in the field requiring to indicate the data base location. The notification shall be filed with the local department of Roskomnadzor at the company’s place of tax registration.

The approved guidelines are not obligatory, however complying with them will ensure that the submitted form will not be considered incomplete, and Roskomnadzor will not require the provision of additional information.